EchoStar Corporation Announces Exchange Offers and Consent Solicitations for 0% Convertible Senior Notes due 2025 and 3.375% Convertible Senior Notes due 2026 Issued by DISH Network Corporation
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Insights
The exchange offers and consent solicitations announced by EchoStar are a strategic financial maneuver designed to optimize the company's capital structure by reducing its aggregate indebtedness and extending the maturity profile of its debt. This move is indicative of EchoStar's proactive approach to managing its liabilities and improving its financial flexibility, which is crucial for facilitating ongoing strategic investments and operational growth.
By offering to exchange existing DISH Network convertible notes for new senior secured notes with a higher interest rate but later maturity, EchoStar is effectively lowering the near-term financial burden while potentially increasing long-term interest expenses. The transaction is contingent on certain conditions, including the effectiveness of a registration statement and the achievement of a minimum tender condition, which introduces an element of uncertainty regarding the completion of the exchange offers.
The restructuring of debt can be seen as a positive signal to investors, as it may imply management's confidence in the company's long-term prospects and its commitment to maintaining a healthy balance sheet. However, the increased interest rate on the new notes could also signal a perceived higher risk associated with EchoStar's debt, which could have implications for the company's cost of capital.
The inclusion of consent solicitations alongside the exchange offers is a legal strategy to amend the terms of the existing indentures governing DISH Network's notes. The Proposed Amendments aim to eliminate certain events of default and restrictive covenants, which could provide EchoStar with more operational leeway and reduce the potential for future defaults triggered by cross-default provisions.
Securing the new EchoStar notes with first priority liens on valuable spectrum assets is a significant legal move that provides collateral to note holders, potentially making the new securities more attractive. However, the legal implications of these changes must be carefully considered by note holders, as they can affect the rights and protections traditionally afforded to debt investors.
Moreover, the solicitation of consents is a critical step that requires a majority of note holders to agree to the amendments, thereby aligning the interests of the debt holders with the company's strategic direction. It's important for investors to understand the legal nuances of these transactions, as they can have long-term implications for their investment.
From a market perspective, EchoStar's strategic move to combine its operations with DISH Network's assets, including satellite technology and a nationwide 5G network, positions the company to potentially become a more formidable player in the wireless connectivity market. The success of the exchange offers could be a bellwether for investor confidence in EchoStar's ability to capitalize on the synergies of this merger and compete more effectively in an industry that is rapidly evolving with the advent of 5G technology.
Furthermore, the market will be closely monitoring the response from note holders to the exchange offers, as a high participation rate could indicate market approval of EchoStar's strategic direction and financial planning. Conversely, low participation might suggest skepticism among investors regarding the company's future performance or disagreement with the proposed terms of the exchange.
Analyzing the response to this exchange offer could provide valuable insights into market perceptions of EchoStar's creditworthiness and strategic initiatives, which can influence the company's stock performance and investor sentiment.
Exchange Offers Intended to Reduce Aggregate Indebtedness and Materially Extend Debt Maturity Profile Providing Significant Runway for Continued Strategic Investment and Opportunity to Combine DISH Network's satellite technology, streaming services and nationwide 5G network with EchoStar's premier satellite communications solutions, creating a global leader in terrestrial and non-terrestrial wireless connectivity
Today's announcement further advances EchoStar's objective of realizing on the synergistic opportunities of the combined business to utilize its valuable portfolio of spectrum and other assets to optimize its capital structure to position the business to execute on its strategic goal of becoming the premier provider of terrestrial mobile, satellite connectivity, and content services.
The following table describes certain terms of the exchange offers:
Title of Existing DISH Notes | CUSIP/ISIN Number(1) | Principal Amount | Exchange Consideration(3) |
| 25470MAF6/US2547MAF68 | ||
| 25470MAB5/US2547MAB54 |
(1) | No representation is made as to the correctness or accuracy of the CUSIP or ISIN numbers listed in this prospectus or printed on the |
(2) | Net of |
(3) | Consideration in the form of principal amount of EchoStar Notes per |
The EchoStar Notes will be guaranteed on a senior secured basis by EchoStar's indirect subsidiary, DBSD Corporation ("DBSD"), and secured by first priority liens on the 20 MHz of AWS-4 spectrum (consisting of 10 MHz of N70 and 10 MHz of N66) held by DBSD (the "Spectrum Collateral"), and EchoStar's indirect subsidiary, DBSD Services Limited, which will provide a security interest consisting of a first priority pledge of the equity interests of DBSD (in each case as described in the Preliminary Exchange Offer Prospectus). EchoStar currently estimates the fair market value of the Spectrum Collateral that will secure the EchoStar Notes to be approximately
Concurrently with the exchange offers, EchoStar is soliciting consents from holders of each series of the Existing DISH Notes to amend the terms of the applicable series of Existing DISH Notes and the indentures governing such Existing DISH Notes to, among other things, eliminate certain events of default (including any cross-defaults related to any payment, bankruptcy or other defaults of any DISH subsidiary) and substantially all of the restrictive covenants in each such indenture and the Existing DISH Notes of the applicable series, including, but not limited to, the merger covenant, the reporting covenant and to make certain conforming changes to each such indenture and the Existing DISH Notes of the applicable series to reflect the proposed amendments (the "Proposed Amendments"). Holders may not consent to the Proposed Amendments without tendering the applicable Existing DISH Notes in the relevant exchange offer, and holders may not tender Existing DISH Notes of any series for exchange without consenting to the Proposed Amendments for such series.
Each exchange offer and consent solicitation is a separate offer and/or solicitation, and each may be individually amended, extended, terminated or withdrawn, subject to certain conditions and applicable law, at any time in the EchoStar's sole discretion, and without amending, extending, terminating or withdrawing any other exchange offer or consent solicitation. Additionally, notwithstanding any other provision of the exchange offers, EchoStar's obligations to accept and exchange any of the Existing DISH Notes validly tendered pursuant to an exchange offer is subject to the satisfaction or waiver of certain conditions, as described in the Registration Statement, and EchoStar expressly reserves its right, subject to applicable law, to terminate any exchange offer and/or consent solicitation at any time.
The exchange offers and consent solicitations will expire at 11:59 p.m.,
A registration statement on Form S-4 relating to the EchoStar Notes (the "Registration Statement") has been filed with the Securities and Exchange Commission (the "SEC") but has not yet become effective. The consummation of each exchange offer and consent solicitation is subject to, and conditional upon, the satisfaction or, where permitted, waiver of certain conditions including, among other things, the effectiveness of the Registration Statement, and at least a majority of the outstanding principal amount of the applicable series of Existing DISH Notes being validly tendered and not properly withdrawn prior to the Expiration Date (the "Minimum Tender Condition"). All conditions to each exchange offer and consent solicitation must be satisfied or, where permitted, waived, on or prior to the Expiration Date. For the avoidance of doubt, EchoStar reserves the right to waive in its sole and absolute discretion the Minimum Tender Condition and accept any and all Existing DISH Notes validly tendered and not validly withdrawn at or prior to the expiration date.
EchoStar is conducting the exchange offers and consent solicitations in order to, among other things, reduce its consolidated indebtedness, address certain of its nearer term debt maturities and resultantly materially extend its debt maturity profile, which will provide significant runway for continued strategic investment in its business and further enhance EchoStar's unique opportunity to combine DISH Network's satellite technology, streaming services and nationwide 5G network with EchoStar's premier satellite communications solutions, creating a global leader in terrestrial and non-terrestrial wireless connectivity.
White & Case LLP is acting as legal advisor to EchoStar and D.F. King & Co., Inc. is acting as exchange agent and information agent for the exchange offers and consent solicitations.
This press release does not constitute an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities, nor shall there be any exchange of the EchoStar Notes for Existing DISH Notes pursuant to the exchange offers and consent solicitations in any jurisdiction in which such exchanges would be unlawful prior to registration or qualification under the laws of such jurisdiction.
About EchoStar Corporation
EchoStar Corporation (Nasdaq: SATS) is a premier provider of technology, networking services, television entertainment and connectivity, offering consumer, enterprise, operator and government solutions worldwide under its EchoStar®, Boost Mobile®, Boost Infinite, Sling TV, DISH TV, Hughes®, HughesNet®, HughesON™, and JUPITER™ brands. In
Where You Can Find Additional Information
As noted above, further details regarding the terms and conditions of the exchange offers and consent solicitations, including descriptions of the EchoStar Notes and the material differences between the EchoStar Notes and the Existing DISH Notes, can be found in the registration statement that has been filed with the SEC but has not yet become effective, and in a tender offer statement on Schedule TO that has been filed with the SEC. The securities subject to the registration statement may not be issued and sold prior to the time the registration statement becomes effective. ANY INVESTOR HOLDING EXISTING DISH NOTES IS URGED TO READ THE REGISTRATION STATEMENT, THE TENDER OFFER STATEMENT AND OTHER DOCUMENTS ECHOSTAR HAS FILED OR WILL FILE WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE ISSUER AND THE OFFERING.
The registration statement, the tender offer statement and other related documents, when filed, can be obtained for free from the SEC's website at www.sec.gov. Documents are also available for free upon oral request made to EchoStar at (303) 706-4000 or written request made to EchoStar Corporation, Attention: Investor Relations, 100 Inverness Terrace East,
Holders can also request copies of the offering materials by contacting D.F. King & Co., Inc. by sending an email to DISH@dfking.com or by calling (800) 967-5084 (
Forward-looking Statements
This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act, including, in particular, statements about plans, objectives and strategies, growth opportunities in our industries and businesses, our expectations regarding future results, financial condition, liquidity and capital requirements, estimates regarding the impact of regulatory developments and legal proceedings, and other trends and projections. Forward-looking statements are not historical facts and may be identified by words such as "future," "anticipate," "intend," "plan," "goal," "seek," "believe," "estimate," "expect," "predict," "will," "would," "could," "can," "may," and similar terms. These forward-looking statements are based on information available to us as of the date hereof and represent management's current views and assumptions. Forward-looking statements are not guarantees of future performance, events or results and involve known and unknown risks, uncertainties and other factors, which may be beyond our control. Accordingly, actual performance, events or results could differ materially from those expressed or implied in the forward-looking statements due to a number of factors. Additional information concerning these risk factors is contained in each of EchoStar's and DISH Network's most recently filed Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, and in EchoStar's subsequent Current Reports on Form 8-K, and other SEC filings. All cautionary statements made or referred to herein should be read as being applicable to all forward-looking statements wherever they appear. You should consider the risks and uncertainties described or referred to herein and should not place undue reliance on any forward-looking statements. The forward-looking statements speak only as of the date made. We do not undertake, and specifically disclaim, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Should one or more of the risks or uncertainties described herein or in any documents we file with the SEC occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.
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SOURCE EchoStar Corporation
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